1 00:00:02,640 --> 00:00:05,360 Speaker 1: Welcome to the Bloomberg Penl Podcast. I'm Paul swing you, 2 00:00:05,360 --> 00:00:07,720 Speaker 1: along with my co host Lisa Brahma wits. Each day 3 00:00:07,760 --> 00:00:10,280 Speaker 1: we bring you the most noteworthy and useful interviews for 4 00:00:10,320 --> 00:00:12,560 Speaker 1: you and your money, whether at the grocery store or 5 00:00:12,600 --> 00:00:15,520 Speaker 1: the trading floor. Find a Bloomberg Penl podcast on Apple 6 00:00:15,560 --> 00:00:18,000 Speaker 1: podcast or wherever you listen to podcasts, as well as 7 00:00:18,000 --> 00:00:22,239 Speaker 1: that Bloomberg dot Com. Time for Bloomberg Opinion. You're joined 8 00:00:22,239 --> 00:00:25,640 Speaker 1: by Bloomberg Opinion columnist Joe and the Sarah. Joe, thanks 9 00:00:25,680 --> 00:00:27,520 Speaker 1: so much for joining us. You got a fascinating column 10 00:00:27,520 --> 00:00:30,080 Speaker 1: a couple of days ago talking about you know, this 11 00:00:30,160 --> 00:00:33,600 Speaker 1: whole concept of a lockdown and quarantine. This is something 12 00:00:33,600 --> 00:00:37,800 Speaker 1: that we haven't necessarily done in some past epidemics in 13 00:00:37,840 --> 00:00:40,599 Speaker 1: this country. And I guess as people think about opening 14 00:00:40,680 --> 00:00:43,560 Speaker 1: up the economy, now there's really two camps out there. 15 00:00:43,840 --> 00:00:45,800 Speaker 1: Those that are probably a little bit more aggressive about 16 00:00:45,840 --> 00:00:47,880 Speaker 1: opening up the economy and those that are a little 17 00:00:47,880 --> 00:00:50,960 Speaker 1: bit more conservative. Talk to us a little bit about 18 00:00:51,200 --> 00:00:54,280 Speaker 1: kind of lockdowns and how effective they've proven to be 19 00:00:54,880 --> 00:00:58,840 Speaker 1: in the past. Well, they've never been used in the past. 20 00:00:58,920 --> 00:01:02,440 Speaker 1: This is the first time they never became uh, sort 21 00:01:02,440 --> 00:01:07,240 Speaker 1: of uh policy, pandemic policy until two thousand six when 22 00:01:07,240 --> 00:01:10,400 Speaker 1: George bush Um asked the government to come up with 23 00:01:10,440 --> 00:01:13,160 Speaker 1: a pandemic plan, and the and the scientists who came 24 00:01:13,240 --> 00:01:16,560 Speaker 1: up with the lockdown idea, Um, they were not infectious 25 00:01:16,600 --> 00:01:19,480 Speaker 1: disease scientists. Um. Uh. And there was a lot of 26 00:01:19,520 --> 00:01:23,160 Speaker 1: controversy about it at the time. Uh. There've been pandemics 27 00:01:23,160 --> 00:01:25,720 Speaker 1: in nineteen fifty seven, there was one in nineteen sixty eight, 28 00:01:25,760 --> 00:01:29,600 Speaker 1: of course the famous one in eighteen. Absolutely a lot 29 00:01:29,640 --> 00:01:32,720 Speaker 1: of people stayed inside because they were terrified, but there 30 00:01:32,760 --> 00:01:36,640 Speaker 1: was never an official and official lockdown. So so the 31 00:01:36,680 --> 00:01:41,240 Speaker 1: answer is, um, there's no there's no previous science to 32 00:01:41,400 --> 00:01:45,120 Speaker 1: know what good the lockdown does. And although it makes 33 00:01:45,120 --> 00:01:48,040 Speaker 1: a lot of intuitive sense that you would stay inside 34 00:01:48,080 --> 00:01:50,559 Speaker 1: and therefore avoid the virus, there's a lot of downsides, 35 00:01:50,600 --> 00:01:53,160 Speaker 1: as we're about to find out when the economy starts 36 00:01:53,160 --> 00:01:56,280 Speaker 1: to open. Yeah, this is what people are saying that basically, 37 00:01:56,360 --> 00:01:59,120 Speaker 1: we don't know how effective it is to limit the spread, 38 00:01:59,160 --> 00:02:00,680 Speaker 1: and we know that it creates it's a lot of 39 00:02:00,760 --> 00:02:04,320 Speaker 1: problems when it comes to when it when it comes 40 00:02:04,320 --> 00:02:07,800 Speaker 1: to the economy. That said, we are seeing a pretty 41 00:02:07,840 --> 00:02:11,400 Speaker 1: strong correlation and I know, correlation is not causation, but 42 00:02:11,480 --> 00:02:16,080 Speaker 1: it is becoming scientifically accepted that the economy is that 43 00:02:16,160 --> 00:02:19,640 Speaker 1: shut down more aggressively and more quickly were those that 44 00:02:19,720 --> 00:02:23,359 Speaker 1: managed to stave off some of the worst effects of 45 00:02:23,400 --> 00:02:26,320 Speaker 1: this virus that we've seen in places like New York 46 00:02:26,360 --> 00:02:30,000 Speaker 1: and Milan. So from that perspective, how can you dismiss 47 00:02:30,040 --> 00:02:35,400 Speaker 1: that as showing the efficacy of this type of of shutdown. Well, 48 00:02:35,440 --> 00:02:37,680 Speaker 1: I don't. I don't dismiss it. But you know, there's 49 00:02:37,720 --> 00:02:41,120 Speaker 1: also this mass the social distancing. There's the fact that 50 00:02:42,040 --> 00:02:45,160 Speaker 1: literally of the people who have died in this pandemic 51 00:02:45,160 --> 00:02:47,760 Speaker 1: have been the elderly, you know, whether you're inside or 52 00:02:47,800 --> 00:02:50,400 Speaker 1: outside um. And then you have states like Texas and 53 00:02:50,440 --> 00:02:54,160 Speaker 1: Florida which have been very lax on lockdowns and and 54 00:02:54,200 --> 00:02:58,200 Speaker 1: their numbers of death are extremely low. So I mean, 55 00:02:58,280 --> 00:03:04,400 Speaker 1: I would argue that, you know, it's really unclear as 56 00:03:04,480 --> 00:03:06,959 Speaker 1: to whether the lockdown is saving a lot of lives 57 00:03:07,080 --> 00:03:10,400 Speaker 1: or not. All right, right there, where are you? Where 58 00:03:10,400 --> 00:03:14,919 Speaker 1: where are you staying right now? I'm in Southampton, Okay, 59 00:03:14,960 --> 00:03:18,760 Speaker 1: So you're not in the city, right correct? Okay? And 60 00:03:18,840 --> 00:03:21,840 Speaker 1: my question is, let's say there were no state mandated 61 00:03:21,880 --> 00:03:25,880 Speaker 1: locktowns of any sort. Would you feel comfortable going about 62 00:03:25,960 --> 00:03:27,640 Speaker 1: your business the way that you had in the past 63 00:03:27,639 --> 00:03:32,720 Speaker 1: and going on the subway? Um, I don't know. That's 64 00:03:32,720 --> 00:03:35,480 Speaker 1: a good question. I think that I if I think 65 00:03:35,520 --> 00:03:37,320 Speaker 1: if I had a mask and gloved, I would, And 66 00:03:37,360 --> 00:03:39,320 Speaker 1: I also think that I would probably have to. I'm 67 00:03:39,320 --> 00:03:41,720 Speaker 1: also sixty eight years old, so I'm in the high 68 00:03:41,800 --> 00:03:45,880 Speaker 1: risk group. Um, there's a lot of Look. Look, you know, 69 00:03:46,000 --> 00:03:48,560 Speaker 1: in March, there's no question I came out to the 70 00:03:48,560 --> 00:03:51,440 Speaker 1: Hamptons because I was scared. But you know, you watch, 71 00:03:51,520 --> 00:03:54,120 Speaker 1: you watch data, you watch things happening, you watch what's 72 00:03:54,120 --> 00:03:56,280 Speaker 1: going to happen to the economy, and you think to yourself, 73 00:03:56,800 --> 00:04:01,000 Speaker 1: you know, is this really the right way to continue 74 00:04:01,040 --> 00:04:04,960 Speaker 1: to proceed. And one distinction that I've been making is 75 00:04:05,040 --> 00:04:10,120 Speaker 1: between the hotspot states and cities like Detroit, UH and 76 00:04:10,200 --> 00:04:13,640 Speaker 1: New York and New Orleans and places like Houston and 77 00:04:13,720 --> 00:04:19,400 Speaker 1: Miami and San Diego which have very very very few Um. 78 00:04:19,560 --> 00:04:22,160 Speaker 1: Death Yeah, well, look, Joe, he raised a really good point, 79 00:04:22,240 --> 00:04:24,040 Speaker 1: and Paul, this I think is a really important thing. 80 00:04:24,040 --> 00:04:26,280 Speaker 1: And I think that Joe, I feel like you want 81 00:04:26,279 --> 00:04:29,640 Speaker 1: to chop my head off, you know. I I honestly, 82 00:04:29,760 --> 00:04:33,600 Speaker 1: I've I'm totally jealous that you're in the Hampton's. I 83 00:04:33,640 --> 00:04:35,880 Speaker 1: also think this is such a politically fraught issue, and 84 00:04:35,920 --> 00:04:39,000 Speaker 1: the question is if they okay, I want to talk 85 00:04:39,040 --> 00:04:41,120 Speaker 1: about that. That is so right, This is the big 86 00:04:41,120 --> 00:04:44,800 Speaker 1: problem here, here's the big problem. It has become a 87 00:04:44,920 --> 00:04:47,720 Speaker 1: political issue. And it's and and and It's like if 88 00:04:47,839 --> 00:04:51,080 Speaker 1: my political party believes in lockdowns, and I believe in lockdowns, 89 00:04:51,080 --> 00:04:53,800 Speaker 1: if my political party says lockdowns and BS, then I 90 00:04:53,960 --> 00:04:57,800 Speaker 1: say that's BS. Nobody on either side is willing to 91 00:04:57,839 --> 00:05:01,040 Speaker 1: just sit down and say, let's look at this with 92 00:05:01,160 --> 00:05:04,599 Speaker 1: fresh eyes, let's think about this from a from a 93 00:05:04,600 --> 00:05:07,960 Speaker 1: point of view of neutrality and science. It's not happening. 94 00:05:08,400 --> 00:05:11,559 Speaker 1: Everybody on both sides says, you know, I'm following the science. 95 00:05:11,600 --> 00:05:13,559 Speaker 1: I'm following the science. Well, what does that even mean 96 00:05:14,440 --> 00:05:16,919 Speaker 1: with a lockdown? Where where? Where? There is where? The 97 00:05:16,960 --> 00:05:21,960 Speaker 1: science is unclear? It's no. I think the issue here 98 00:05:22,200 --> 00:05:24,560 Speaker 1: right now, you know, the conversation Joe is just, you know, 99 00:05:24,640 --> 00:05:27,200 Speaker 1: the cost of the economic cost of lockdown versus the 100 00:05:27,880 --> 00:05:30,080 Speaker 1: cost in lives. And that's kind of what the reopening 101 00:05:30,120 --> 00:05:34,640 Speaker 1: debate seems to be evolving to. I think that's absolutely true. 102 00:05:35,080 --> 00:05:37,880 Speaker 1: And um, let me let me let me ask you this. 103 00:05:37,880 --> 00:05:40,400 Speaker 1: This is kind of how I ended my column yesterday. 104 00:05:40,680 --> 00:05:44,800 Speaker 1: You know, it's quite likely that the virus will will 105 00:05:44,839 --> 00:05:49,200 Speaker 1: fade in the summertime, because that's often what happens, and 106 00:05:49,200 --> 00:05:51,880 Speaker 1: then it will probably come back with a vengeance in October. 107 00:05:52,480 --> 00:05:55,680 Speaker 1: And if that happens and we're reopening the economy, are 108 00:05:55,720 --> 00:05:58,080 Speaker 1: you gonna say, well, let's shut everything down again for 109 00:05:58,120 --> 00:06:01,680 Speaker 1: three months, because back, I don't know that's gonna be 110 00:06:02,080 --> 00:06:04,719 Speaker 1: really tough. I don't think. I don't think anybody's going 111 00:06:04,760 --> 00:06:06,599 Speaker 1: to agree to that. I just don't think the society 112 00:06:06,640 --> 00:06:08,160 Speaker 1: is gonna agree to that. And I think we're gonna 113 00:06:08,160 --> 00:06:10,400 Speaker 1: have to learn to live with this thing with with 114 00:06:10,560 --> 00:06:15,120 Speaker 1: measures like masks and social distancing that are less severe 115 00:06:15,160 --> 00:06:17,680 Speaker 1: than a lockdown, we could wind up in a depression. 116 00:06:17,839 --> 00:06:20,120 Speaker 1: Thanks so much for us. We gotta run, Joe, Joe No. 117 00:06:20,240 --> 00:06:22,760 Speaker 1: Sarah Colums for Bloomberg Opinion. It's an awesome column. Check 118 00:06:22,760 --> 00:06:25,680 Speaker 1: it out on Bloomberg dot Com, slash Opinion. All his 119 00:06:25,920 --> 00:06:31,919 Speaker 1: great work. This is Bloomberg Markets with Lisa Abramowitz and 120 00:06:31,960 --> 00:06:35,919 Speaker 1: Paul Sweeney on Bloomberg Radio. What I mean listening to 121 00:06:36,040 --> 00:06:39,000 Speaker 1: healthcare officials, the big, big thing right now is to 122 00:06:39,040 --> 00:06:43,080 Speaker 1: continue to test for the virus and then contact trace 123 00:06:43,440 --> 00:06:46,359 Speaker 1: to see to kind of contain, uh, this spread of 124 00:06:46,400 --> 00:06:48,680 Speaker 1: the virus. That's certainly important now and will be even 125 00:06:48,720 --> 00:06:51,000 Speaker 1: more important. Ty Center is a second wave. And when 126 00:06:51,000 --> 00:06:53,120 Speaker 1: you talk about the contact tracing, there's been a lot 127 00:06:53,120 --> 00:06:56,159 Speaker 1: of apps that people have been talking about, mostly the 128 00:06:56,279 --> 00:06:59,120 Speaker 1: Apple and Google approach, kind of a joint venture there, 129 00:06:59,160 --> 00:07:01,359 Speaker 1: which is really in and of itself, has been getting 130 00:07:01,360 --> 00:07:03,640 Speaker 1: most of the press, but a startup out there has 131 00:07:03,720 --> 00:07:06,640 Speaker 1: also been they think they might have a better mouse trap, 132 00:07:06,720 --> 00:07:09,040 Speaker 1: and that is a Jared all Good, co founder and 133 00:07:09,120 --> 00:07:11,600 Speaker 1: chief strategy officer for the firm twenty. They're based in 134 00:07:11,640 --> 00:07:14,600 Speaker 1: San Francisco. They've got their own app, Healthy Together, and 135 00:07:14,640 --> 00:07:18,400 Speaker 1: in fact, the state of Utah is actually adopting it. Jared, 136 00:07:18,400 --> 00:07:21,640 Speaker 1: thanks so much for joining us here. Tell us about 137 00:07:21,800 --> 00:07:25,320 Speaker 1: your app and why say a state like Utah would 138 00:07:25,360 --> 00:07:29,480 Speaker 1: select your app versus at Apple Google, which would seem 139 00:07:29,520 --> 00:07:33,800 Speaker 1: to be the easy choice. Yeah, good, good morning, Paul 140 00:07:33,840 --> 00:07:36,200 Speaker 1: and Liza, thanks for having me on um. Yeah. So, 141 00:07:37,360 --> 00:07:41,000 Speaker 1: Healthy Together was developed to work in partnership and in 142 00:07:41,080 --> 00:07:43,640 Speaker 1: conjunction with the public Health Department of the State of 143 00:07:43,720 --> 00:07:47,440 Speaker 1: Utah UM. So they approached us several weeks ago UM 144 00:07:47,600 --> 00:07:50,720 Speaker 1: and saw that we had some technology that was unique 145 00:07:50,720 --> 00:07:54,240 Speaker 1: for helping to augment and automate certain parts of the 146 00:07:54,280 --> 00:07:57,200 Speaker 1: manual contact tracing process. So we partner with them to 147 00:07:57,320 --> 00:08:00,480 Speaker 1: develop the Healthy Together application both as a friend end 148 00:08:00,520 --> 00:08:03,960 Speaker 1: application and also has back in services and tools that 149 00:08:04,040 --> 00:08:07,160 Speaker 1: we deploy back into the Department of Health UM. So really, 150 00:08:07,200 --> 00:08:10,880 Speaker 1: what we've built as a way for residents to UH 151 00:08:10,920 --> 00:08:15,320 Speaker 1: to help the manual public health contact tracing effort by 152 00:08:15,440 --> 00:08:18,560 Speaker 1: using an app on their phone that helps us UH 153 00:08:18,600 --> 00:08:21,720 Speaker 1: and them identify where they've been and who they've been 154 00:08:21,760 --> 00:08:26,600 Speaker 1: in contact with should they come out positive with COVID nineteen, 155 00:08:27,440 --> 00:08:31,040 Speaker 1: so that manual contact go ahead. No. I find this 156 00:08:31,160 --> 00:08:34,240 Speaker 1: so fascinating, this idea that people are are going to 157 00:08:34,280 --> 00:08:37,720 Speaker 1: help the effort by volunteering to be tracked on their phones. 158 00:08:38,120 --> 00:08:40,800 Speaker 1: It strikes me that the scope of data is important 159 00:08:40,800 --> 00:08:43,560 Speaker 1: for this to be effective, that the greatest number of 160 00:08:43,600 --> 00:08:46,040 Speaker 1: people need to be registered and tracked for this to 161 00:08:46,080 --> 00:08:50,720 Speaker 1: actually prevent the virus from spreading. What's your advantage over 162 00:08:50,840 --> 00:08:53,680 Speaker 1: say Google and Apple who also have an app and 163 00:08:53,760 --> 00:08:57,600 Speaker 1: also have the host of data in the footprint. Yeah. 164 00:08:57,600 --> 00:08:59,960 Speaker 1: So something that I would say to that is, first 165 00:09:00,000 --> 00:09:02,640 Speaker 1: of all, Healthy Together is more than just a contact 166 00:09:02,640 --> 00:09:06,560 Speaker 1: tracing application. UM. The State of Utah's strategy is to 167 00:09:06,640 --> 00:09:10,560 Speaker 1: do assessing, testing and tracing. So the Healthy Together platform 168 00:09:10,600 --> 00:09:13,720 Speaker 1: allows residents to assess themselves to find out if they 169 00:09:13,720 --> 00:09:16,440 Speaker 1: should get tested for COVID nineteen uh and then if 170 00:09:16,480 --> 00:09:18,720 Speaker 1: they should and we can refer them to, you know, 171 00:09:18,760 --> 00:09:22,160 Speaker 1: the nearest testing resource through the application. And so just 172 00:09:22,200 --> 00:09:25,280 Speaker 1: shortening the time from somebody becoming symptomatic to getting them 173 00:09:25,280 --> 00:09:27,800 Speaker 1: into the testing process and then finding out if they're 174 00:09:27,800 --> 00:09:30,640 Speaker 1: positive and then quarantining themselves is a huge part of 175 00:09:30,640 --> 00:09:34,240 Speaker 1: the value proposition that we've delivered with the State of Utah. Now, 176 00:09:34,240 --> 00:09:37,840 Speaker 1: as it pertains to contact tracing UM, our approach is 177 00:09:37,880 --> 00:09:41,080 Speaker 1: actually not an opposition with the Google and Apple approach. UM. 178 00:09:41,120 --> 00:09:44,040 Speaker 1: Google and Apple are, at least as we understand or not, 179 00:09:44,240 --> 00:09:46,760 Speaker 1: coming out with applications. What they have built up as 180 00:09:46,800 --> 00:09:50,000 Speaker 1: a set of APIs the application developers like us can 181 00:09:50,040 --> 00:09:53,520 Speaker 1: integrate with to to tap into a broader network of 182 00:09:53,559 --> 00:09:56,360 Speaker 1: contact tracing. And that's something that we see as a 183 00:09:56,360 --> 00:09:59,280 Speaker 1: as a huge value add uh. We hope to to 184 00:09:59,360 --> 00:10:01,200 Speaker 1: find a way to work and partner with Apple and 185 00:10:01,240 --> 00:10:03,560 Speaker 1: Google to use those API s UM so that we 186 00:10:03,600 --> 00:10:07,679 Speaker 1: can augment our current process. So you're in the state 187 00:10:07,880 --> 00:10:12,439 Speaker 1: of Utah. Are there other states you're in discussions with? Yeah, 188 00:10:12,520 --> 00:10:14,800 Speaker 1: of course. Look since UM, since we released just a 189 00:10:14,840 --> 00:10:16,720 Speaker 1: few weeks ago in the state of Utah, UM, we've 190 00:10:16,720 --> 00:10:19,880 Speaker 1: had a tremendous amount of inbound from other states who 191 00:10:19,880 --> 00:10:23,040 Speaker 1: are interested, who are doing similar strategies in terms of 192 00:10:23,080 --> 00:10:26,360 Speaker 1: standing up more manual contact tracing and then looking for 193 00:10:26,440 --> 00:10:30,280 Speaker 1: tools and technology to augment and expedite that process. UM. 194 00:10:30,320 --> 00:10:32,800 Speaker 1: So we had several conversations with other states. UM. We 195 00:10:32,840 --> 00:10:36,560 Speaker 1: will be announcing some partnerships with other states coming soon. UM. 196 00:10:36,640 --> 00:10:38,600 Speaker 1: And something that's been interesting to us that you know, 197 00:10:38,640 --> 00:10:41,280 Speaker 1: we we we learned as we got into this UM 198 00:10:41,400 --> 00:10:45,040 Speaker 1: is that businesses are also participating in contact tracing UM. 199 00:10:45,080 --> 00:10:48,319 Speaker 1: Companies now have UH. You know, they're feeling the pressure 200 00:10:48,360 --> 00:10:50,679 Speaker 1: to bring their employees back to work UM, and they 201 00:10:50,679 --> 00:10:52,360 Speaker 1: need to do it in a safe way, and they 202 00:10:52,400 --> 00:10:54,920 Speaker 1: need to communicate to their team members UM that they 203 00:10:54,920 --> 00:10:57,080 Speaker 1: have a plan and a strategy for dealing with the 204 00:10:57,080 --> 00:11:00,600 Speaker 1: occasion UM that somebody in their workforce turns out to 205 00:11:00,600 --> 00:11:03,600 Speaker 1: be positive for COVID nineteen. And so we're seeing, um, 206 00:11:03,640 --> 00:11:06,320 Speaker 1: you know, lots of interest from companies as well who 207 00:11:06,400 --> 00:11:08,560 Speaker 1: want to implement tools and and just figure out the 208 00:11:08,559 --> 00:11:11,760 Speaker 1: way to respond to this effort using manual and technological 209 00:11:11,800 --> 00:11:14,760 Speaker 1: contact tracing as well. There's a tension for anyone who's 210 00:11:14,760 --> 00:11:18,440 Speaker 1: creating a business in order to help facilitate the social 211 00:11:18,480 --> 00:11:21,199 Speaker 1: distancing and prevention at this proNT of the pandemic. How 212 00:11:21,320 --> 00:11:23,480 Speaker 1: you make money at a time when you're providing a 213 00:11:23,559 --> 00:11:26,719 Speaker 1: service for the social good. How does that tension get 214 00:11:26,760 --> 00:11:31,200 Speaker 1: resolved with you? Hi, Yeah, that's a great question. Look, UM, 215 00:11:31,360 --> 00:11:33,480 Speaker 1: you know, as uh, you know, as you know, this 216 00:11:33,600 --> 00:11:35,960 Speaker 1: was not our business. UM. You know, coming into this 217 00:11:36,520 --> 00:11:38,920 Speaker 1: UM and we did not raise our hand and say, 218 00:11:38,960 --> 00:11:41,120 Speaker 1: you know, we want to build contact tracing and sell 219 00:11:41,160 --> 00:11:43,440 Speaker 1: it to the world. UM. The state of Utah, the 220 00:11:43,440 --> 00:11:46,080 Speaker 1: Governor's office, reached out to us and identified us as 221 00:11:46,080 --> 00:11:49,000 Speaker 1: a solution. UM, and you know, to be able to 222 00:11:49,040 --> 00:11:54,359 Speaker 1: pivot our business and dedicate the number of resources engineers, designers, 223 00:11:54,360 --> 00:11:57,480 Speaker 1: product managers UM to really build a high quality product 224 00:11:57,559 --> 00:12:00,199 Speaker 1: both in the mobile application and also in these back 225 00:12:00,280 --> 00:12:02,920 Speaker 1: end systems, and those things just cause resources to be 226 00:12:02,960 --> 00:12:05,000 Speaker 1: able to do it um and so our goal is 227 00:12:05,080 --> 00:12:08,199 Speaker 1: to serve as many you know, states and enterprises as 228 00:12:08,200 --> 00:12:10,400 Speaker 1: we possibly can um and to do that and to 229 00:12:10,520 --> 00:12:12,720 Speaker 1: scale up, it's just going to take money for us 230 00:12:12,720 --> 00:12:15,600 Speaker 1: to be able to do it. Twenty co founder Jared 231 00:12:15,679 --> 00:12:17,640 Speaker 1: all Good, thank you so much for being with us, 232 00:12:17,679 --> 00:12:22,000 Speaker 1: talking about his Healthy Together contact tracing app, which has 233 00:12:22,040 --> 00:12:28,160 Speaker 1: been deployed by the State of Utah. This is Bloomberg 234 00:12:28,240 --> 00:12:32,319 Speaker 1: Markets with Lisa Ramowitz and Paul Sweeney on Bloomberg Radio. 235 00:12:33,559 --> 00:12:35,920 Speaker 1: Certainly a lot of news coming out of China and 236 00:12:36,040 --> 00:12:39,200 Speaker 1: Hong Kong in the last twenty four hours. We've seen 237 00:12:39,240 --> 00:12:42,040 Speaker 1: some news here that it's uh, you know, really trying 238 00:12:42,040 --> 00:12:45,920 Speaker 1: to really trying to reassert some or reassert more power 239 00:12:46,080 --> 00:12:48,080 Speaker 1: and control over Hong Kong. To get a sense of 240 00:12:48,120 --> 00:12:50,280 Speaker 1: what's really going on, what it means for Hong Kong, 241 00:12:50,320 --> 00:12:53,160 Speaker 1: and it's economy and it's people. We welcome Yvonne Man. 242 00:12:53,200 --> 00:12:57,480 Speaker 1: She's the anchor for Daybreak Asia and Bloomberg Markets China Open. 243 00:12:57,920 --> 00:13:00,000 Speaker 1: She's in Hong Kong, and Tom or like chief economist 244 00:13:00,000 --> 00:13:02,040 Speaker 1: for Bloombrick Economics, on the phone from Washington, d C. 245 00:13:02,200 --> 00:13:06,040 Speaker 1: Tom spent a lot of time living in Beijing as well. So, Yvon, 246 00:13:06,120 --> 00:13:07,840 Speaker 1: thanks so much for joining us. I want to start 247 00:13:07,880 --> 00:13:10,440 Speaker 1: with you just give our listeners a sense of what 248 00:13:10,760 --> 00:13:14,679 Speaker 1: actually happened between China and Hong Kong over the last 249 00:13:14,720 --> 00:13:18,480 Speaker 1: twenty four hours. Well, it certainly has been quite an 250 00:13:18,480 --> 00:13:22,160 Speaker 1: interesting twenty four hours fall And basically what has happened 251 00:13:22,200 --> 00:13:25,560 Speaker 1: is that the NPC, the National People's Congress in Beijing, 252 00:13:25,640 --> 00:13:29,480 Speaker 1: decided to enact this National Security Law which basically curbs 253 00:13:29,760 --> 00:13:34,240 Speaker 1: DIO sessions addition for interference and terrorism in Hong Kong. 254 00:13:34,280 --> 00:13:37,520 Speaker 1: It's also known as Article twenty three here in the city, 255 00:13:37,640 --> 00:13:42,560 Speaker 1: and which was legislation that has basically been installed in 256 00:13:42,600 --> 00:13:45,800 Speaker 1: the Legislative Council for for many years now, since two 257 00:13:45,800 --> 00:13:48,360 Speaker 1: thousand and three. Back then when it was introduced, is 258 00:13:48,480 --> 00:13:51,760 Speaker 1: fueled some widespread demonstrations. The government was then forced to 259 00:13:51,800 --> 00:13:55,480 Speaker 1: scrap it. So we now see a very stronger and 260 00:13:55,559 --> 00:13:58,800 Speaker 1: much more bold in Beijing than seventeen years ago. So 261 00:13:58,840 --> 00:14:01,960 Speaker 1: they're taking matters into our own hands. They're frustrated by 262 00:14:02,000 --> 00:14:04,280 Speaker 1: the months of unrest that it's hearth the economy. They're 263 00:14:04,280 --> 00:14:08,359 Speaker 1: frustrated by lawmakers who have failed to get through this legislation. 264 00:14:08,480 --> 00:14:11,800 Speaker 1: So the new strategy now from Beijing is to basically 265 00:14:11,880 --> 00:14:16,120 Speaker 1: by pass Legislative Council here, skip the whole legislative process 266 00:14:16,160 --> 00:14:19,520 Speaker 1: and do this. And they're from the MPC, so that's 267 00:14:19,560 --> 00:14:22,520 Speaker 1: why this jokes so much outrage from those in the 268 00:14:22,560 --> 00:14:25,680 Speaker 1: pro democracy side. Yvonne, you've done a great job of 269 00:14:25,720 --> 00:14:27,880 Speaker 1: outlining this, and we thank you so much for staying 270 00:14:28,120 --> 00:14:30,400 Speaker 1: so late to speak with us and lay it out 271 00:14:30,520 --> 00:14:33,080 Speaker 1: for us here. Tom, I'd love your perspective from an 272 00:14:33,080 --> 00:14:37,600 Speaker 1: economic viewpoint. Why Beijing is doing this now against a 273 00:14:37,640 --> 00:14:40,520 Speaker 1: backdrop of a pandemic and a huge hit to its 274 00:14:40,520 --> 00:14:44,160 Speaker 1: economic growth. Why is it not more concerned about the 275 00:14:44,280 --> 00:14:47,240 Speaker 1: loss of Hong Kong as an international center and hub 276 00:14:47,320 --> 00:14:51,720 Speaker 1: for finance and beyond UM So, I think what's what's 277 00:14:51,760 --> 00:14:55,320 Speaker 1: really clear, Lisa, is that the politics is trumping the 278 00:14:56,040 --> 00:15:01,160 Speaker 1: is trumping the economics UM and the national curiocy considerations 279 00:15:01,240 --> 00:15:06,000 Speaker 1: the Beijing are more important than any risk to Hong 280 00:15:06,080 --> 00:15:08,680 Speaker 1: kong status as a as a financial hub and a 281 00:15:08,800 --> 00:15:14,080 Speaker 1: pathway for capital and expertise in trade between the mainland 282 00:15:14,080 --> 00:15:16,280 Speaker 1: and the rest of the world. I think the other 283 00:15:16,320 --> 00:15:18,680 Speaker 1: point to keep in mind about that the timing of 284 00:15:18,760 --> 00:15:22,440 Speaker 1: this is, I mean, this is a move um, which 285 00:15:22,560 --> 00:15:28,400 Speaker 1: in normal times would be expected to be controversial internationally. Right, 286 00:15:29,000 --> 00:15:32,160 Speaker 1: a move which would be controversially in the United States, 287 00:15:32,600 --> 00:15:36,040 Speaker 1: with the United Kingdom with its historic relationship with Hong Kong, 288 00:15:36,560 --> 00:15:40,560 Speaker 1: Um with potentially some European countries as well. But at 289 00:15:40,560 --> 00:15:45,440 Speaker 1: this particular moment in time, the world is in crisis, Um. 290 00:15:45,680 --> 00:15:52,040 Speaker 1: Domestic leaders President Trump, Boris Johnson, Angelo Merkel, Um, they 291 00:15:52,040 --> 00:15:54,960 Speaker 1: have other things on their mind. Right, They're dealing with 292 00:15:55,120 --> 00:16:00,200 Speaker 1: a pandemic. They're dealing with economies in deep, in deep crisis. Um. 293 00:16:00,520 --> 00:16:03,160 Speaker 1: So I don't have a crystal ball into the thinking 294 00:16:03,160 --> 00:16:07,480 Speaker 1: of China's leadership, But potentially this is also a moment 295 00:16:07,600 --> 00:16:11,240 Speaker 1: where they can make this controversial, mute move with perhaps 296 00:16:11,800 --> 00:16:16,360 Speaker 1: less global repercussions than they would see in normal times. Yvonne, 297 00:16:16,360 --> 00:16:19,840 Speaker 1: what is the expected response from those in China? Prior 298 00:16:20,120 --> 00:16:23,760 Speaker 1: in Hong Kong, prior to the pandemic, the protesters were 299 00:16:23,880 --> 00:16:28,880 Speaker 1: consistent week after week after week in their protests. Um, 300 00:16:28,920 --> 00:16:33,160 Speaker 1: what is the expectation here for this move. Well, there's 301 00:16:33,160 --> 00:16:36,120 Speaker 1: already some calls for people to hit the streets this 302 00:16:36,160 --> 00:16:39,760 Speaker 1: weekend and the following uh A week after as well, 303 00:16:39,840 --> 00:16:43,400 Speaker 1: and we've seen the activists already hitting the streets tonight 304 00:16:43,560 --> 00:16:46,240 Speaker 1: handing out leaflets to the people in the streets educating 305 00:16:46,280 --> 00:16:50,760 Speaker 1: about them about this national security law. So we have 306 00:16:50,960 --> 00:16:54,680 Speaker 1: seen the anger resurface thing again and potentially we are 307 00:16:54,840 --> 00:16:57,240 Speaker 1: could be saying the stage for a repeat of what 308 00:16:57,360 --> 00:17:00,960 Speaker 1: we saw late last year. So the prospects aren't good 309 00:17:01,000 --> 00:17:03,720 Speaker 1: at this moment. And it just seems like at this 310 00:17:03,960 --> 00:17:07,920 Speaker 1: point from from the opposition side, they believe that by 311 00:17:08,000 --> 00:17:13,400 Speaker 1: bypassing legislative process, that this is the end of one country, 312 00:17:13,440 --> 00:17:16,639 Speaker 1: two systems, this is the end of Hong Kong's autonomy. 313 00:17:16,720 --> 00:17:19,840 Speaker 1: So it's hard to see that this national security law 314 00:17:20,160 --> 00:17:24,200 Speaker 1: could actually end the the unrest out there, even carry 315 00:17:24,200 --> 00:17:27,399 Speaker 1: a LANDA chief executive herself said tonight that she doesn't 316 00:17:27,440 --> 00:17:31,600 Speaker 1: expect protests to end amid this security law, and if anything, 317 00:17:31,640 --> 00:17:34,160 Speaker 1: it's it's only feels more anger on the streets, especially 318 00:17:34,160 --> 00:17:38,600 Speaker 1: now that this this outbreak and the coronavirus has eased 319 00:17:38,600 --> 00:17:40,680 Speaker 1: a bit here in the city. It's it's calm down 320 00:17:40,680 --> 00:17:43,200 Speaker 1: in terms of the numbers of local infections has been 321 00:17:43,320 --> 00:17:45,520 Speaker 1: down for the last couple of weeks. Now that's given 322 00:17:45,520 --> 00:17:47,840 Speaker 1: a little more comfortable people to come out again to 323 00:17:48,520 --> 00:17:50,800 Speaker 1: you thought. I'm just wondering from your perspective, I saw 324 00:17:50,840 --> 00:17:53,440 Speaker 1: that real estate stocks got hit the hardest in Hong Kong. 325 00:17:53,480 --> 00:17:57,639 Speaker 1: I'm wondering how much you're seeing anecdotally or from data 326 00:17:57,720 --> 00:18:01,359 Speaker 1: perspectives foreign money and will the money going out of 327 00:18:01,359 --> 00:18:05,840 Speaker 1: the property sector in Hong Kong. Yeah, certainly was a 328 00:18:05,920 --> 00:18:08,880 Speaker 1: concern late last year when when you were hearing people 329 00:18:08,920 --> 00:18:10,720 Speaker 1: saying that they were pulling money out of Hong Kong 330 00:18:11,080 --> 00:18:13,840 Speaker 1: and moving it to Singapore, for example. There's a lot 331 00:18:13,840 --> 00:18:16,960 Speaker 1: of questions of whether Hong Kong status as an international 332 00:18:17,240 --> 00:18:20,720 Speaker 1: finance hub is now under a question. Uh, and so 333 00:18:20,880 --> 00:18:23,480 Speaker 1: markets really took this by surprise, the fact that the 334 00:18:23,600 --> 00:18:27,560 Speaker 1: MPC we heard this type of legislation. Um, you know, 335 00:18:27,640 --> 00:18:30,000 Speaker 1: at this point, we haven't seen a whole lot of 336 00:18:30,280 --> 00:18:33,120 Speaker 1: those concerns or at least that type of movement just yet. 337 00:18:33,119 --> 00:18:37,440 Speaker 1: But what's different now versus say, back in two thousand 338 00:18:37,440 --> 00:18:40,560 Speaker 1: and eight, and what led to Hong Kong I should 339 00:18:40,600 --> 00:18:42,520 Speaker 1: say stars not two thousand and eight, was that what 340 00:18:42,680 --> 00:18:45,880 Speaker 1: led to a revival in the economy was the fact 341 00:18:45,880 --> 00:18:48,480 Speaker 1: that they opened up the borders from mainland tourists to 342 00:18:48,520 --> 00:18:51,600 Speaker 1: come that essentially gave it a v shaped recovery here 343 00:18:51,600 --> 00:18:53,840 Speaker 1: in Hong Kong. Now that we're in a recession, a 344 00:18:53,840 --> 00:18:56,520 Speaker 1: lot of economists say it's unlikely we're going to see 345 00:18:56,840 --> 00:18:59,800 Speaker 1: that quick of a bounce back in the economy because 346 00:19:00,280 --> 00:19:03,760 Speaker 1: we have been the mainline tours arrivals dwindle. In fact, 347 00:19:03,800 --> 00:19:06,439 Speaker 1: I think they're they're in a single digit at most, 348 00:19:07,000 --> 00:19:10,639 Speaker 1: so and given the anti China sentiment there is in 349 00:19:10,720 --> 00:19:14,320 Speaker 1: the streets there, you can't exactly rely on Chinese tourists 350 00:19:14,359 --> 00:19:17,760 Speaker 1: to revive the economy anymore. And they were key buyers 351 00:19:17,760 --> 00:19:20,680 Speaker 1: in the property market as well, so potentially we could 352 00:19:20,760 --> 00:19:24,600 Speaker 1: see thumb rupture there in in the property market. We 353 00:19:24,640 --> 00:19:26,600 Speaker 1: haven't seen a whole lot of it just yet. It's 354 00:19:26,600 --> 00:19:29,480 Speaker 1: actually been still quite table at this point. But you know, 355 00:19:29,800 --> 00:19:32,639 Speaker 1: Tim will tell Tom just real quick here thirty seconds 356 00:19:32,680 --> 00:19:34,280 Speaker 1: before we let you go, what are you looking for 357 00:19:34,480 --> 00:19:39,360 Speaker 1: over the weekend? As Beijing has its annual power So 358 00:19:39,680 --> 00:19:42,800 Speaker 1: we've already seen China step back from its growth target, 359 00:19:43,040 --> 00:19:47,000 Speaker 1: that GDP target, which set the tone set expectations for 360 00:19:47,119 --> 00:19:51,439 Speaker 1: the year UM. They've significantly ramps up fiscal stimulus, so 361 00:19:51,560 --> 00:19:55,720 Speaker 1: that will provide some support to sentiment and demand UM 362 00:19:55,800 --> 00:19:59,280 Speaker 1: in terms of Hong Kong is As Von said, I 363 00:19:59,320 --> 00:20:01,920 Speaker 1: think the key thing to look for now is what's 364 00:20:01,960 --> 00:20:05,040 Speaker 1: the reaction on the Hong Kong Street. Does this bring 365 00:20:05,400 --> 00:20:08,480 Speaker 1: a very large number of people back out to protest? 366 00:20:08,880 --> 00:20:11,560 Speaker 1: And if that happens, what then are the consequences for 367 00:20:11,680 --> 00:20:15,399 Speaker 1: Hong Kong markets, real estate and the economy going forwards. 368 00:20:16,280 --> 00:20:19,200 Speaker 1: Tom or Like chief economist for Bloomberg Economics, and Von Man, 369 00:20:19,240 --> 00:20:23,000 Speaker 1: anchor of Daybreak Asia and Bloomberg Markets, which had to 370 00:20:23,040 --> 00:20:26,560 Speaker 1: open for Bloomberg joining us, staying late to give us 371 00:20:26,720 --> 00:20:32,280 Speaker 1: that report from Hong Kong. Definitely a historic seizure rupture 372 00:20:32,359 --> 00:20:35,639 Speaker 1: here between Hong Kong and Beijing. Long time in the works, 373 00:20:36,000 --> 00:20:39,120 Speaker 1: yet really raising questions about why now amid a backdrop 374 00:20:39,160 --> 00:20:44,719 Speaker 1: of rising see no US tension. You're listening to Bloomberg 375 00:20:44,760 --> 00:20:48,879 Speaker 1: Markets with Lisa Abrama Ed's and Paul Sweeney on Bloomberg Radio. 376 00:20:49,520 --> 00:20:52,440 Speaker 1: We've talked a lot about how passive investing is all 377 00:20:52,440 --> 00:20:55,240 Speaker 1: the rage and everyone wants to go into an index fund, 378 00:20:55,280 --> 00:20:58,639 Speaker 1: and yet we often failed to discuss the very active 379 00:20:58,800 --> 00:21:02,520 Speaker 1: process of composed using the underlying index, and that's very 380 00:21:02,600 --> 00:21:05,359 Speaker 1: much in the forefront of people's minds right now. Is 381 00:21:05,400 --> 00:21:09,480 Speaker 1: the SMP, which is the most tracked index bypassive funds, 382 00:21:09,800 --> 00:21:13,280 Speaker 1: goes under potentially a pretty big overhaul. Joining us now 383 00:21:13,320 --> 00:21:15,680 Speaker 1: to discuss this is Nick KOLs, co founder of Data 384 00:21:15,720 --> 00:21:19,000 Speaker 1: Trek Research. Always great to get your thoughts, Nick, I 385 00:21:19,040 --> 00:21:21,960 Speaker 1: want to start with why the SMP may have to 386 00:21:22,000 --> 00:21:28,760 Speaker 1: rejigger which companies includes. Yes, the biggest reason, and you 387 00:21:28,760 --> 00:21:31,400 Speaker 1: know we see this day to day, is that there 388 00:21:31,440 --> 00:21:33,960 Speaker 1: are a lot of companies at the bottom end of 389 00:21:34,000 --> 00:21:36,960 Speaker 1: this index in terms of market cap, that have fallen 390 00:21:37,000 --> 00:21:40,280 Speaker 1: away below the typical levels where the SMP committee begins 391 00:21:40,320 --> 00:21:44,520 Speaker 1: to think about replacing them. So, for example, Harley Davidson 392 00:21:44,880 --> 00:21:48,680 Speaker 1: three billion dollar market cap, GAP stores at three point 393 00:21:48,720 --> 00:21:51,720 Speaker 1: five billion dollar market cap, that's well below these five 394 00:21:51,800 --> 00:21:54,240 Speaker 1: to eight billion dollars the committee tends to think about 395 00:21:54,280 --> 00:21:57,000 Speaker 1: in terms of taking companies out of the index and 396 00:21:57,040 --> 00:21:59,239 Speaker 1: replacing them with new ones. And it's a function of 397 00:21:59,840 --> 00:22:02,720 Speaker 1: all the issues of the COVID crisis that we've seen 398 00:22:02,760 --> 00:22:07,320 Speaker 1: in terms of how different companies are doing versus others. So, Nick, 399 00:22:07,680 --> 00:22:09,960 Speaker 1: is the SMP that the committee there that looks at 400 00:22:10,000 --> 00:22:12,280 Speaker 1: some of these companies. Are they trying to give some 401 00:22:12,320 --> 00:22:14,120 Speaker 1: of these companies the benefit of the doubt and turn 402 00:22:14,200 --> 00:22:17,080 Speaker 1: in a sense that hey, this is really related to 403 00:22:17,119 --> 00:22:20,280 Speaker 1: this pandemic, and the pandemic is we think it will 404 00:22:20,320 --> 00:22:24,000 Speaker 1: be a relatively short lived issue. And then once we 405 00:22:24,040 --> 00:22:27,000 Speaker 1: get to the other side of this, these stocks were rebound. 406 00:22:28,160 --> 00:22:30,399 Speaker 1: You know that that has to be part of their calculus, 407 00:22:30,480 --> 00:22:33,800 Speaker 1: because one virtue of the five hundred is that it 408 00:22:33,960 --> 00:22:37,120 Speaker 1: is pretty sticky. You only see twenty to thirty changes 409 00:22:37,160 --> 00:22:39,760 Speaker 1: in the index a year, and they try to maintain 410 00:22:39,800 --> 00:22:42,320 Speaker 1: a very low portfolio turnover because that's one of the 411 00:22:42,320 --> 00:22:45,240 Speaker 1: advantages of index investing, is not having a lot of 412 00:22:45,320 --> 00:22:48,320 Speaker 1: churned and transaction costs in the portfolio. But as we 413 00:22:48,359 --> 00:22:49,920 Speaker 1: go through the balance of the year, some of this 414 00:22:50,040 --> 00:22:53,520 Speaker 1: doesn't have their force their hand. How much longer do 415 00:22:53,560 --> 00:22:55,680 Speaker 1: you want to wait before some of these companies that 416 00:22:55,720 --> 00:22:59,080 Speaker 1: were already in structural decline, like anybody that sells stuge 417 00:22:59,119 --> 00:23:02,520 Speaker 1: department stores, Gaps stores, or Harley Davidson. How long do 418 00:23:02,520 --> 00:23:04,320 Speaker 1: you want to give them before you realize, Okay, they're 419 00:23:04,359 --> 00:23:06,360 Speaker 1: not going to come back in any really serious form 420 00:23:06,359 --> 00:23:09,600 Speaker 1: and we've got to move along. What's the reputational pressure 421 00:23:09,640 --> 00:23:15,440 Speaker 1: for them? For the S ANDP Committee, the reputational issue 422 00:23:15,480 --> 00:23:17,080 Speaker 1: is as you said at the top, this is the 423 00:23:17,160 --> 00:23:21,600 Speaker 1: most widely followed, widely indexed measure of U S stocks 424 00:23:22,200 --> 00:23:24,640 Speaker 1: anywhere in the world. It is the most popular, not 425 00:23:24,680 --> 00:23:27,920 Speaker 1: just here in the US, but everywhere, largely because it's 426 00:23:27,960 --> 00:23:31,400 Speaker 1: done so well relative to any of the same For example, 427 00:23:31,520 --> 00:23:34,240 Speaker 1: M s C I EFA M S C I E M. 428 00:23:34,280 --> 00:23:36,320 Speaker 1: You know, the ST five hundred has been an absolute 429 00:23:36,400 --> 00:23:39,200 Speaker 1: horse of an investment over the last ten years, compounding 430 00:23:39,200 --> 00:23:42,560 Speaker 1: at thirteen percent annually until the fall off the beginning 431 00:23:42,560 --> 00:23:45,760 Speaker 1: of two thousand and twenty. Done far better than everything else. 432 00:23:45,920 --> 00:23:49,119 Speaker 1: So it's really important from an indexing perspective, from a 433 00:23:49,160 --> 00:23:52,520 Speaker 1: business perspective, that this index continue to hold that structural 434 00:23:52,560 --> 00:23:55,920 Speaker 1: advantage over every other measure of global stocks. So, Nick, 435 00:23:55,960 --> 00:23:58,000 Speaker 1: I know there are traders out there that like to 436 00:23:58,200 --> 00:24:00,760 Speaker 1: kind of, you know, speculate on aims that are going 437 00:24:00,800 --> 00:24:04,480 Speaker 1: to come into the SMP. Conversely, also and also names 438 00:24:04,520 --> 00:24:06,639 Speaker 1: that that will come out of the index. Are we 439 00:24:06,680 --> 00:24:11,520 Speaker 1: seeing some higher volatility around some of those names? You know, 440 00:24:11,560 --> 00:24:13,359 Speaker 1: it has been hard to measure. We did look at 441 00:24:13,400 --> 00:24:16,280 Speaker 1: that for our client. Note it was very hard to 442 00:24:16,320 --> 00:24:19,440 Speaker 1: pick out what the volatility from the macro environment has 443 00:24:19,480 --> 00:24:22,280 Speaker 1: been versus what you really point out is a very 444 00:24:22,320 --> 00:24:26,960 Speaker 1: common kind of index ad index um delete kind of mentality. 445 00:24:27,080 --> 00:24:29,720 Speaker 1: So hard to tell right now, but if you look 446 00:24:29,720 --> 00:24:31,600 Speaker 1: at I'm looking at the bottom ten names in the 447 00:24:31,760 --> 00:24:36,480 Speaker 1: SMP right now, Haynes Brands, Harley Davidson, Norwegian Crews, L Brands, 448 00:24:36,600 --> 00:24:39,960 Speaker 1: PVH Clow, Serve, H and R, Block, Discovery, and Xerox. 449 00:24:40,000 --> 00:24:43,200 Speaker 1: Those are at the very bottom of the list, all 450 00:24:43,240 --> 00:24:46,359 Speaker 1: brand names, all things we know, some of them. I 451 00:24:46,359 --> 00:24:48,159 Speaker 1: would assume we're going to leave the index in the 452 00:24:48,200 --> 00:24:50,760 Speaker 1: next year, just because there's gonna be new names that 453 00:24:50,760 --> 00:24:54,720 Speaker 1: the committee wants to add. I'm struck, Nick by a 454 00:24:54,800 --> 00:24:56,879 Speaker 1: point that you made in your recent research, which I 455 00:24:56,920 --> 00:25:00,560 Speaker 1: thought was really fantastic, which is this concept that yes, 456 00:25:00,600 --> 00:25:04,040 Speaker 1: people want to invest passively in broad markets, and yet 457 00:25:04,119 --> 00:25:07,959 Speaker 1: the decision and how to how to count that market 458 00:25:08,160 --> 00:25:12,600 Speaker 1: is very subjective, the sort of active quality of index composition. 459 00:25:13,080 --> 00:25:17,119 Speaker 1: What types of subjective measures does the SMP committee have 460 00:25:17,200 --> 00:25:21,120 Speaker 1: to consider were deciding on some of these issues. Yeah, 461 00:25:21,160 --> 00:25:23,280 Speaker 1: it's it is to me the most fascinating points in 462 00:25:23,320 --> 00:25:26,359 Speaker 1: all this because it is ultimately a choice. You know, 463 00:25:26,680 --> 00:25:31,000 Speaker 1: the committee has a very well, you know historically, you know, 464 00:25:31,280 --> 00:25:35,040 Speaker 1: very precise measure of what they want to add. There's 465 00:25:35,080 --> 00:25:39,119 Speaker 1: profitability requirements as market cap requirements. I would kind of 466 00:25:39,119 --> 00:25:41,080 Speaker 1: take the conversation a little bit different direction, and just 467 00:25:41,800 --> 00:25:44,040 Speaker 1: everybody considered the fact that Tesla is not in the 468 00:25:44,160 --> 00:25:48,040 Speaker 1: SP five hundreds, but Hard Davidson is um which to 469 00:25:48,080 --> 00:25:50,800 Speaker 1: me is a central irony, and the issue is one issue, 470 00:25:50,840 --> 00:25:54,280 Speaker 1: It is profitability. Tesla has not yet had a sequence 471 00:25:54,320 --> 00:25:56,960 Speaker 1: of four quarters with a strunk together a profitable four 472 00:25:57,040 --> 00:25:59,719 Speaker 1: quarter trailing. They could have done it this quarter, they 473 00:25:59,800 --> 00:26:02,320 Speaker 1: miss by about a hundred and twenty four million dollars, 474 00:26:02,640 --> 00:26:04,240 Speaker 1: and so as a result, they're not going to be 475 00:26:04,280 --> 00:26:06,359 Speaker 1: an index for a while. Now, that's a hundred and 476 00:26:06,359 --> 00:26:09,560 Speaker 1: fifty billion dollar plus market cap company that could have 477 00:26:09,600 --> 00:26:11,760 Speaker 1: been added when it was ten or twelve or even 478 00:26:11,840 --> 00:26:14,440 Speaker 1: fifty billion dollars and added a hundred billion dollars of 479 00:26:14,480 --> 00:26:17,560 Speaker 1: values the index, and yet because of that profitability measure, 480 00:26:17,920 --> 00:26:19,960 Speaker 1: they're not, And given what's going on in the world, 481 00:26:20,000 --> 00:26:22,239 Speaker 1: they're not gonna be there for a while. So does 482 00:26:22,280 --> 00:26:24,960 Speaker 1: that kind of suggest Nick that the SMP needs to 483 00:26:25,000 --> 00:26:26,960 Speaker 1: rethink some of this as you think about some of 484 00:26:27,000 --> 00:26:30,240 Speaker 1: the technologies out there, you know, like a Tesla, like 485 00:26:30,320 --> 00:26:33,200 Speaker 1: some other tech companies that are just huge, and they're 486 00:26:33,200 --> 00:26:37,199 Speaker 1: focusing more on market share gains than profitability, and the 487 00:26:37,200 --> 00:26:39,159 Speaker 1: market seems to be okay with that and rewarding that. 488 00:26:39,280 --> 00:26:42,280 Speaker 1: So should not the name like Tesla be in there? 489 00:26:43,760 --> 00:26:47,240 Speaker 1: It absolutely should be, But I understand the committee's tension 490 00:26:47,280 --> 00:26:49,480 Speaker 1: because for every test that there's an uber or lift 491 00:26:50,000 --> 00:26:52,160 Speaker 1: or if you had added those, you know it would 492 00:26:52,200 --> 00:26:54,160 Speaker 1: not have had the same results. You've got to take 493 00:26:54,280 --> 00:26:56,399 Speaker 1: good with the bad in the end. You know, the 494 00:26:56,520 --> 00:26:59,800 Speaker 1: SMP Committee may one day decide, okay, let's add an 495 00:26:59,800 --> 00:27:02,679 Speaker 1: ear G overlay to some of our decision making. And 496 00:27:02,720 --> 00:27:06,080 Speaker 1: if a company is clearly relevant from saying E standpoint, 497 00:27:06,440 --> 00:27:09,240 Speaker 1: then it should have some weight against the lack of profitability. 498 00:27:09,280 --> 00:27:11,280 Speaker 1: But the committee is not there yet. And these are 499 00:27:11,320 --> 00:27:13,159 Speaker 1: things that take a long time to develop, but I 500 00:27:13,160 --> 00:27:15,760 Speaker 1: think they're going to have to get there just real quick. Nick, 501 00:27:15,800 --> 00:27:18,680 Speaker 1: I wonder how much the reconsideration here of the SMP 502 00:27:18,800 --> 00:27:22,199 Speaker 1: Committee comes in the heels of NAZDAC success. Is that 503 00:27:22,280 --> 00:27:25,680 Speaker 1: part of it? You know, that is definitely a part 504 00:27:25,680 --> 00:27:28,320 Speaker 1: of it. And I would also say, look at, for example, 505 00:27:28,359 --> 00:27:31,200 Speaker 1: what the Hong Kong the Hang Sang is thinking about 506 00:27:31,440 --> 00:27:34,760 Speaker 1: in terms of adding some Chinese companies purely based on 507 00:27:34,840 --> 00:27:37,280 Speaker 1: whether or not they have enough stock listed in Hong Kong. 508 00:27:37,800 --> 00:27:40,639 Speaker 1: Hang Sang is a big property and bank index, and 509 00:27:40,680 --> 00:27:43,359 Speaker 1: that's not really where the world is going. So I 510 00:27:43,400 --> 00:27:46,760 Speaker 1: think every index provider and every exchange is thinking about 511 00:27:47,119 --> 00:27:49,200 Speaker 1: how do we pull things into something that we can 512 00:27:49,240 --> 00:27:51,760 Speaker 1: index because the world has not so passive and it's 513 00:27:51,760 --> 00:27:54,960 Speaker 1: become a much more important conversation. And Nick, thanks so 514 00:27:55,000 --> 00:27:57,160 Speaker 1: much for joining us. We appreciate you taking some time 515 00:27:57,200 --> 00:28:00,600 Speaker 1: here before the three day weekend, Nicholas kofe under Data 516 00:28:00,640 --> 00:28:04,639 Speaker 1: Trek Research giving us some always some interesting food for thought, Lisa, 517 00:28:04,680 --> 00:28:06,480 Speaker 1: and that is, you know, kind of looking at that 518 00:28:06,640 --> 00:28:09,160 Speaker 1: SMP five hundred, the components of the SMP five hundred, 519 00:28:09,480 --> 00:28:12,000 Speaker 1: and Nick brought up a great point that Harley Davidson, 520 00:28:12,040 --> 00:28:13,840 Speaker 1: with a five billion dollar market cap is in there, 521 00:28:13,880 --> 00:28:16,800 Speaker 1: but uh Tesla is not. Yeah, but how do you 522 00:28:16,840 --> 00:28:19,080 Speaker 1: even determine who the winners and the losers are going 523 00:28:19,119 --> 00:28:21,800 Speaker 1: to be in this environment when you've got no forward guidance, 524 00:28:22,080 --> 00:28:25,000 Speaker 1: you have such an uncertain backdrop. It becomes a very 525 00:28:25,040 --> 00:28:28,119 Speaker 1: difficult decision to make for the longer term. Yeah, it 526 00:28:28,160 --> 00:28:30,439 Speaker 1: really does. And I think as Nick was suggesting the 527 00:28:30,560 --> 00:28:34,520 Speaker 1: SMP Committee favors some stability and stability and profitability, so 528 00:28:34,600 --> 00:28:37,040 Speaker 1: but interesting to see how that plays out. For Lisa 529 00:28:37,119 --> 00:28:40,280 Speaker 1: Bramo it's on Paul Sweeney that does it for Bloomberg 530 00:28:40,280 --> 00:28:43,280 Speaker 1: markets for this week and during the weekend. This is Bloomberg. 531 00:28:45,320 --> 00:28:47,560 Speaker 1: Thanks for listening to the Bloomberg P and L podcast. 532 00:28:47,720 --> 00:28:50,320 Speaker 1: You can subscribe and listen to interviews at Apple Podcasts 533 00:28:50,400 --> 00:28:53,480 Speaker 1: or whatever podcast platform you prefer. Paul Sweeney, I'm on 534 00:28:53,520 --> 00:28:56,160 Speaker 1: Twitter at pt Sweeney. And Lisa abram Woyds I'm on 535 00:28:56,200 --> 00:28:59,080 Speaker 1: Twitter at Lisa A. Bramwoit's one before the podcast. You 536 00:28:59,080 --> 00:29:01,640 Speaker 1: can always catch us worldwide on Bloomberg Radio.